The truth about market dynamics that financial media never mentions
By Paul Reid
This article is not about indicators or fundamental strategies. Instead, I hope to open your eyes to the real and powerful influences behind the global markets, what triggers trends, and what role the mainstream financial news channels really play. Let’s explore the big picture together to give you a wider view of how the markets will shift this year and beyond.
How the markets used to react
Not so long ago, stocks were influenced by company performance, revenue, and innovation. When a new product hit the market and started trending, big investors would jump on the money train and ride the rise. Likewise, when a product failed, investors would jump ship.
Indices and currencies would often respond to economic reports. If a nation’s GDP was trending high and jobless claims were falling, the nation’s currency would be perceived as a strong investment. That’s the Wikipedia version, but reality is far from that.
While those mechanisms still play a role in the financial world, there are less obvious influences pushing and pulling the markets in different directions, and when you recognize them, those indecisive moments you occasionally have while forecasting will start to make more sense.
So what is this untold dynamic that can change your analysis habits?
Financial media narratives
To explain how a media narrative works and the power it holds, let’s talk about a Chinese AI company that is dominating the news–at the time of writing.
DeepSeek is a Chinese open-source artificial intelligence company. I’ve had a play around with their model. It’s comparable to one of the older ChatGPT versions. I noticed several familiar mistakes and artifacts, suggesting that the model could be plagiarized from OpenAI, so it’s not a technical breakthrough, in my opinion.
But–strangely–the media buzz isn’t mentioning the model’s performance, and instead they are focusing on the overall production cost. Liang Wenfeng is said to have created DeepSeek at a total cost of around $6 million (USD), and mainstream media are comparing that to OpenAI’s $100 million spend on ChatGPT. A rather one-sided and biased comparison, don’t you think? After all, OpenAI did all the ground work and also released 5 distinct models, each with improvements over the predecessors.
Add to that voice capability, image generation, video generation, and we might imagine how OpenAI’s lofty spend would be considerably higher than producing an old ChatGPT ripoff. And yet, intelligent journalists in key media roles are not mentioning any of this. Suspicious?
Here’s where the forced narrative comes in.
According to mainstream media, DeepSeek caused a dip in the Nasdaq, a tech-heavy index of top-performing companies. So let’s summarize this:
China released a cheap AI chat knockoff with limited performance and dated features, and almost one year later, a thirty-two trillion dollar index fell from $21,854 down to $20,843 per share in just a few days. Such a drop requires an estimated index equity dump of around $1.45 trillion… and all because of a Chinese startup company? Does this sound logical?
Look at the top ten companies listed on the Nasdaq worth a staggering $12 trillion market cap:
- Apple Inc. (AAPL) - Technology
- Microsoft Corporation (MSFT) - Technology
- Alphabet Inc. (GOOGL) - Technology
- Amazon.com, Inc. (AMZN) - Technology
- NVIDIA Corporation (NVDA) - Technology
- Tesla, Inc. (TSLA) - Automotive and Clean Energy
- Meta Platforms, Inc. (META) - Technology
- ASML Holding N.V. (ASML) - Technology
- PayPal Holdings, Inc. (PYPL) - Financial Services
- Moderna Therapeutics, Inc. (MRNA) - Biotechnology
So we are supposed to believe that an unknown startup company out of China outweighed those tech giants along with the 3,572 companies? So what’s really going on?
Revitalizing stagnant markets
The financial markets are rather like water. If there isn’t a constant flow, stagnation follows. Flow means money moving from one market to another, from commodities to bonds to stocks. That flow causes volatility. And when it comes to the tech sector, the principle is the same. Some of us remember the dot-com bubble bursting, so it’s no surprise that efforts to avoid another crash might include exaggerating the truth. Certain mechanisms are in place to keep the markets vital, and the biggest by far is mainstream financial media.
Financial media pushing the buttons
As one major news channel says, context changes everything, but context can be invented, warped, and manipulated to create false narratives. Big financial channels start the process by selling a new narrative to the world. They are the ones reporting on such things as a Chinese start up company threatening US domination of the AI space. The narrative trickles down to smaller trading channels and blogs, and if it goes viral, a new sentiment is born.
In the case of DeepSeek, the narrative went viral shortly after a Nasdaq selloff began. Simply, it was the scapegoat or excuse for the dip. But the narrative was weak, founded on nonsense, and it didn’t stick in the investment community. The dip was brief and perhaps not as deep as the big whales had hoped for. The downtrend lost momentum, big investors recognized the long entry point, and the following rebound returned the Nasdaq to its unforced range.
But fundamental traders trusting the news narrative, it would have been a bad few days full of Stop Loss triggers. Untold millions of retail traders took the bearish bait, and their equity was transferred to those pushing the narrative. And now you know this. But that brings us to the question of who triggers the media narratives in the first place?
Who pushes financial media?
Let’s be clear, nobody can point a finger at one organization. Multiple massive hedge funds thrive on these forced narratives that cause blips in the markets. Not long after the Nasdaq dipped, it rebounded to $21,355 and is continuing on a tentative bullish trajectory. Financial media is now praising the tech space and AI innovation once again, and stories are forming suggesting that DeepSeek was indeed a plagiarized creation. The narrative is shifting back to the bull.
So what’s the point of knowing all this?
As traders, our goal is to question everything, preempt the trends, and pull out of the markets at optimum times. To do this, I’d like you to start watching the news with a big-picture view. Whenever you see a repetitive news report that quickly spreads to other financial channels, question the validity of the narrative. If something smells fishy, consider the possibility that this is just a revitalization through volatility. Keep in mind, revitalization doesn’t always mean bullish rallies, so don’t blindly hit the Buy button. News can prompt sell-offs too with the goal of creating a buyers entry point. Buy low, sell high!
From now on, when watching the mainstream news, think like a billionaire and question everything, and remember that most smaller channels simply parrot the mainstream narratives without questioning the validity. Viral doesn’t always mean it’s true.
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This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Author:
Paul Reid
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.